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Customers want payment options; many retailers reluctant to invest

Payment options have become central to customers' shopping experience and remain a very big concern for many retailers, yet more than half of retailers are hesitant to invest in the desired technology.

While up to 93 percent of retailers believe consumers want a broader choice of payment tools, and 80 see payments as a clear part of their business strategy, 54 percent are holding back on their investment in new technology because of security concerns. These were among the findings of the "2015 Global Payments Insight Survey" from ACI Worldwide, a payments software and hosting company, and Ovum, a market research firm.

"Retailers are feeling enormous pressure to deliver new services and channel options to meet customer demand," Michael Grillo, senior product marketing manager, ACI Worldwide, told FierceRetailIT. "In order to deliver on the requirements, they need payment solutions which are flexible and secure."

Costs for payment tech have increased in the past 18 months, reported 49 percent of retailers, and 56 percent expect costs to keep rising. But the customer experience is paramount, with 50 percent of retailers citing it as their key expected driver of return on investment resultant of any increase to their adoption of new payment technology.

There is a balancing act involved in delivering new channel options or innovative services in that they come with added responsiblities relevant to payment data security and fraud prevention, Grillo said.

"While some retailers are more willing to invest in newer technologies—such as mobile payment acceptance and unmanned kiosks—others are mired in siloed or legacy infrastructures that make it very difficult to add new services without a full rip-and-replace approach," he said. In some cases, retailers are locked into vendor contracts that limit their spending and ability to offer new services.

The combination of these factors suggests that maintaining the status quo is no longer an option for retailers. Older legacy payment infrastructure will become more expensive and stagnant in its offerings of new payment options and capabilities to consumers over time, thus leaving retailers more exposed to fraud and other security risks.

The EMV chip card transition presents opportunities for technological upgrades, as well as challenges such as timely implementation and the necessary education of shoppers and employees.

"The looming October 2015 deadline for EMV in the U.S. is creating a perfect storm for retailers," Grillo said. "Unfortunately many will not be ready in time with in-store EMV-ready payment acceptance capabilities." If either the retailers or their credit-card-issuing partners are not ready, the fraud liability shifts to the party that is least prepared.

"For those that will meet the in-store deadline, there is still a need to shore up e-commerce fraud prevention. History has shown us in other countries that card-present fraud moves to card-not-present environments in a post-EMV world," Grillo said.

However, Grillo said the bigger advantage is "the attractiveness of real-time clearing and settlement for retailers [that] comes from a liquidity perspective as money is moved more immediately and could give the retailer a more accurate reflection of their books."